WASHINGTON (dpa-AFX) - After ending Wednesday's choppy trading session modestly lower, stocks showed a more substantial move to the downside during trading on Thursday. The major averages once again failed to sustain an early upward move and pulled sharply as the day progressed.
The major averages saw further downside going into the end of the day, closing near their lows of the session. The Nasdaq plunged 469.32 points or 2.0 percent to 22,597.15, the S&P 500 tumbled 108.71 points or 1.6 percent to 6,832.76 and the Dow slumped 669.42 points or 1.3 percent to 49,451.98.
The sell-off on Wall Street was partly attributed to concerns about the impact of the artificial intelligence buildout on industries other than the tech sector.
Concerns about the impact AI could have on revenues and profit margins of financial, transportation and logistics and even commercial real estate companies generated considerable selling pressure.
Renewed weakness among tech stocks also weighed on Wall Street amid a steep drop by shares of Cisco Systems (CSCO).
Cisco plummeted by 12.3 percent after the networking giant reported better than expected fiscal second quarter results but provided disappointing guidance for the current quarter.
Partly reflecting the nosedive by Cisco, the NYSE Arca Networking Index tumbled by 3.0 percent on the day.
Gold stocks also saw substantial weakness amid a steep drop by the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 6.9 percent.
Significant weakness was also visible among transportation stocks due to the AI concerns, with the Dow Jones Transportation Index plunging by 4.0 percent.
Financial, steel and energy stocks also saw considerable weakness, while interest rate-sensitive telecom and utilities stocks bucked the downward trend amid a steep drop by treasury yields.
On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits dipped by less than expected last week.
The report said initial jobless claims slipped to 227,000, a decrease of 5,000 from the previous week's revised level of 232,000.
Economists had expected jobless claims to fall to 220,000 from the 231,000 originally reported for the previous week.
The National Association of Realtors also released a report showing existing home sales pulled back by much more than expected in the month of January.
The focus now shifts to the Labor Department's report on consumer price inflation that is due to be released before the start of trading on Friday.
'Forecasts suggest the critical core CPI measure could ease to around 2.5%, marking a near five-year low,' said Daniela Hathorn, Senior Market Analyst at Capital.com. 'If inflation comes in line with - or ideally below - expectations, the strength of the labor market may become secondary.'
She added, 'A softer inflation print would keep rate cuts firmly priced in and could restore upward momentum in risk assets.'
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday. South Korea's Kospi spiked by 3.1 percent, while Hong Kong's Hang Seng Index slid by 0.9 percent and Japan's Nikkei 225 Index closed marginally lower.
The major European markets also ended the day mixed. While the French CAC 40 Index rose by 0.3 percent, the German DAX Index closed just below the unchanged line and the U.K.'s FTSE 100 Index fell by 0.7 percent.
In the bond market, treasuries moved sharply higher, more offsetting the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 6.8 basis points to a two-month closing low of 4.104 percent.
Looking Ahead
Trading on Friday is likely to be driven by reaction to the Labor Department's report on consumer price inflation in the month of January, which could have a significant impact on the outlook for interest rates.
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